As a digitally connected lifestyle becomes the norm for many across Africa, it's not surprising that mobile phone penetration has shot up in the past decade, from 1 percent in 2000 to 54 percent last year. While the growth is good for mobile companies, the fact that many African users switch out SIM cards for cheaper rates is not.

Mobile customers often use multiple SIM cards for the same phone to benefit from price promotions offered by rival companies as well as to find a way around spotty network coverage. Shuffling multiple SIM cards has become such common practice that the typical mobile user in Nigeria has an average of two to three SIM cards. In South Africa, the number of SIM cards owned actually exceeds the population.

So how can mobile companies try to keep their customers loyal? Many are beginning to offer microinsurance as an additional incentive, such as MTN Group, Africa's leading telecommunications provider, and Airtel Africa.

The mobile operator Tigo Ghana has been offering free life insurance to its customers for years now. Customers receive life insurance not only for themselves but also for one family member as well. The payout received depends on how much airtime they use in a month, varying from $104 to $520 USD. The customer can also choose to double their life insurance coverage by paying $0.68 per month, providing up to $1,040 in death benefits.

Network operators said their biggest problem is that 99 percent of their customers are pay-and-go, and very disloyal," said Andrew Kuper, president of LeapFrog Investments, in a February Financial Times interview. "The customer walks around with three SIM cards, and the MNO [mobile network operator] has to fight a price war. When airtime adds to their insurance, customers turn from price‐conscious pay-and-go customers to loyal subscribers. The mobile operator gets something they really need.

Tigo partnered with Bima, a Swedish mobile microinsurance company, which designed an easy registration process to help people who have never had insurance before. An SMS is sent the first week of every month to the customer showing how much insurance they have earned for the month. Bima also takes care of the claims process, making sure families can receive their claim payouts within three days of filing documents.

There is huge demand for insurance products, not just in Ghana but in [all] emerging markets," Bima's chief executive, Gustaf Agartsson said in a news release last year. "There is a general perception that insurance is for people with high incomes. But we come in with a product for people with low incomes – and customers appreciate a free product.

Not only is Tigo gaining more loyal customers by offering free life insurance, but the customers are also benefitting greatly. Life insurance, while the most basic of insurance coverage, is a good stepping stone for the poor to begin exploring other kinds of insurance--like crop failure coverage--that can provide a significant cushion against sinking even deeper into poverty.

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